DS Smith shuts lid on div­i­dend pay­out

The Daily Telegraph - Business - - Business - Louis ash­worth

PACK­AG­ING group DS Smith dropped sharply af­ter re­port­ing full-year re­sults that missed an­a­lysts’ es­ti­mates and main­tained its div­i­dend sus­pen­sion.

The FTSE 100 group posted rev­enues of £6.04bn for the 12 months to the end of April – down 2pc on the pre­vi­ous year – with a profit be­fore tax of £368m.

Its fac­to­ries have re­mained open through­out the coro­n­avirus cri­sis, with height­ened e-com­merce de­mand boost­ing a core pil­lar of its op­er­a­tions.

Miles Roberts, its chief ex­ec­u­tive, said: “Every week for the past eight weeks has been busier than in the run up to Christ­mas, de­spite the mas­sive wider eco­nomic dam­age from coro­n­avirus.”

In the UK, de­mand for DS Smith’s food and flower pack­ag­ing has more than dou­bled, while pack­ag­ing for clothes and leisure prod­ucts has risen more than 60pc.

But the group dis­ap­pointed in­vestors by main­tain­ing the sus­pen­sion of its div­i­dend.

Mr Roberts added: “With the cur­rent eco­nomic un­cer­tainty, we con­tinue to fo­cus on our em­ploy­ees, our cus­tomers, our com­mu­ni­ties and on the ef­fi­ciency and cash gen­er­a­tion of our busi­ness and ac­cord­ingly the board con­sid­ers it pre­ma­ture to re­sume div­i­dend pay­ments at this stage.” Citi’s Paul Bradley said the de­ci­sion not to de­clare a div­i­dend was a sur­prise, adding it “looks to us to be an over-abun­dance of cau­tion, rather than a real is­sue of af­ford­abil­ity.”

The group dropped 22p to 296.7p, leav­ing it as the big­gest faller on the FTSE 100.

Euro­pean shares jumped yes­ter­day as op­ti­mism over re­open­ings, vac­cine hopes and bet­ter-than-ex­pected eco­nomic in­di­ca­tors put some wind in in­vestors’ sails.

Nearly all off Lon­don’s blue-chips gained ground, with travel firms, re­tail­ers and fi­nan­cials all per­form­ing strongly.

Pri­mark owner As­so­ci­ated Bri­tish Foods jumped af­ter re­port­ing a “re­as­sur­ing and en­cour­ag­ing” re­bound in sales af­ter re­open­ing stores last month.

Bar­clays’ War­ren Ack­er­man called the up­date “im­pres­sive”, adding: “The fear of big dis­count­ing has not ma­te­ri­alised with mark­downs lim­ited, bod­ing well for mar­gins.” ABF climbed 81.5p to £20.46.

Else­where, en­ergy sup­plier Na­tional Grid dropped 51.8p to 939.2p af­ter HSBC an­a­lyst Ver­ity Mitchell cut its rat­ing to hold, while Sains­bury’s shares cooled off slightly af­ter ris­ing on Wed­nes­day.

Down on the FTSE 250, which per­formed in line with its blue-chip sib­ling, shares in aerospace en­gi­neer­ing group Meg­gitt jumped 18.9p to 324p.

The group warned it ex­pects or­ganic rev­enue to be 30pc lower in the three months to the end of June, and down about 15pc over the whole first half, af­ter a “sub­stan­tial re­duc­tion in both pas­sen­ger de­mand and air traf­fic” prompted by Covid-19 cut its civil aerospace rev­enues in half.

It said “ini­tial signs of a re­cov­ery in com­mer­cial aerospace have emerged” in re­cent weeks, but warned the road to re­cov­ery looks far from as­sured.

Jef­feries’ Sandy Mor­ris said the up­date was “re­as­sur­ing”, adding that the cur­rent cri­sis might prompt some fun­da­men­tal changes in how Meg­gitt op­er­ates.

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